After FCC Chairman Ajit Pai unveiled his C-Band reorganization plan detail, the industry, including NATE, noted that the plan appeared to strike the right balance to free up access to the critical mid-band spectrum while protecting incumbent users. Industry access to spectrum ultimately equates to more deployment opportunities for NATE member companies, which will deploy the infrastructure to convert the airwaves into connectivity to drive the 5G economy.
“NATE applauds FCC Chairman Ajit Pai for unveiling draft rules today that would reform the use of the C-band and make a large amount of spectrum available for 5G, the next generation of wireless technology,” NATE’s Director of Legislative and Regulatory Affairs Jim Goldwater, said in a prepared statement.
However, the C-band proceeding has taken a turn for the absurd. Apparently, Intelsat does not agree with NATE or the FCC. It put out the word it was considering filing a Chapter 11. I guess they were none too happy that the paltry sum of $9.7 billion put on the table by Pai, to clear the spectrum, so it can be brought to auction by the end of this year. They are saying that that just is not enough compensation.
Do not get me wrong. I have said all along that there should be some compensation for relocating. I think Pai’s offer is more than generous. Especially after what the C-Band Alliance tried to pull with the auction.
This comes on the heels of Congress taking a hard look at the shenanigans going on in this band. There has been criticism by Congress over the prospect of high payments for the three providers, which are based in Luxembourg and South America, to relocate from the C-Band. To wit, Senator John Kennedy, (R-La) was one of the Congresspersons calling for some scrutinization of the mischief going on between the satellite players, the C-Band Alliance and the FCC. In a tweet, Kennedy penned “American taxpayers own the C-Band.” And there are others.
Well, I guess if it were China that was the home of the Satcom three, as opposed to Belgium and South America, this would have a much different scenario. In such a case, I’m sure our petulant leader would immediately tweet some ridiculous pro-America diatribe and sign an executive order banning doing business with them. Or, if it were Russia, he would want to up the compensation. But, for the time being, he does not have a clue as to what this is all about so hopefully, it will play out without his meddling.
As I see it, Intelsat is playing, a pretty savvy position. They know that if they do file Chapter 11, it will lock up the band. Intelsat’s assets, including its “rights” to the C-band frequencies, would be entangled in court proceedings for years to come.
Also, according to New Street Research, the C-Band Alliance, backed by Intelsat and SES, would walk out of the process if the compensation was less than $16 billion.
In case you do not recall, the C-Band Alliance tried to pull a fast one trying to arrange an auction where they would receive ALL of the payments from the sale of the embattled C-Band frequencies. Fortunately, Congress got wind of this and sent the C-Band Alliance packing before they got too far with this nefarious attempt to have a private auction and keep the estimated $77 billion that the auctions are expected to bring.
Hmmm… some of this does not make sense. That is why I call this shenanigans. First of all, the C-Band Alliance is a self-serving group that speaks for the satellite players formed by them to facilitate the relocation. There is nothing wrong with such organizations since they are formed to protect self-interests. And, many such organizations, such as WIA, CTIA and others stand the high ground and are respectable and honest. They only advocate, not try to pull fast ones!
What that says to me is this, recently formed, “alliance” is nothing more than a pack of overpaid, legal gunslingers hired to mire the process in legal garbage – to steal as much money as possible from the American taxpayer. It does not own and has no rights or control over the band or frequencies, regardless of what they are claiming. And the fact that they tried to steal up to $77 billion shows their real colors!
Second of all, the frequencies do not belong to them, or to the satellite companies. They are U.S. frequencies and have been licensed to them for use for decades. Therefore, if this does go to court, what I see is that their use of the frequencies would be the asset, not the frequencies themselves. I do not claim to be a legal whiz here, so this is mostly referring back to a couple of business law courses I took along my academic journey.
Of course, it is a bit more complicated than that because there are legal documents that define much of this. But the overall picture, in my mind, is if they do not own it, they cannot claim it in the bankruptcy.
Third, if the bands they play in were being fully utilized by all players, there would not be 300+ megahertz of frequencies that could be refarmed.
Life is full of disappointments. Intelsat, SES, and Telesat have had years of making money in these bands. This is the next generation of wireless coming upon us. It has a different set of metrics than the status quo and will require some pain to get it optimized – that is why they are being offered what I consider not a paltry sum. Intelsat’s debt burden of $14 billion is not our problem.
For once I agree with this President’s mentality of American interests first. Let Intelsat file for Chapter 11. Let the C-Band Alliance walk out of the talks. This is American spectrum and we decide what to do with it. If they get too huffy, we can simply take this spectrum from them through legislative (or executive) action and they can go home empty-handed. Our government already has imminent domain authority to grab whatever real property it wants (at a fair market price, they claim, but that is often up for debate). I am sure they can spin that to work on spectrum if they want. And in this case, $9 billion seems more than enough compensation.
Finally, the C-Band Alliance is also walking on thin ice if one comes from the national security perspective. Are they not aware of this administration’s view that 5G is important for security, as well as, commercial reasons? If the Administration wants, it can simply declare these frequencies critical to national security and then all bets are off.